Correlation Between Above Food and Lancaster Colony
Can any of the company-specific risk be diversified away by investing in both Above Food and Lancaster Colony at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Above Food and Lancaster Colony into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Above Food Ingredients and Lancaster Colony, you can compare the effects of market volatilities on Above Food and Lancaster Colony and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Above Food with a short position of Lancaster Colony. Check out your portfolio center. Please also check ongoing floating volatility patterns of Above Food and Lancaster Colony.
Diversification Opportunities for Above Food and Lancaster Colony
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Above and Lancaster is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Above Food Ingredients and Lancaster Colony in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lancaster Colony and Above Food is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Above Food Ingredients are associated (or correlated) with Lancaster Colony. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lancaster Colony has no effect on the direction of Above Food i.e., Above Food and Lancaster Colony go up and down completely randomly.
Pair Corralation between Above Food and Lancaster Colony
Given the investment horizon of 90 days Above Food Ingredients is expected to under-perform the Lancaster Colony. In addition to that, Above Food is 5.12 times more volatile than Lancaster Colony. It trades about -0.03 of its total potential returns per unit of risk. Lancaster Colony is currently generating about 0.1 per unit of volatility. If you would invest 16,908 in Lancaster Colony on August 29, 2024 and sell it today you would earn a total of 1,650 from holding Lancaster Colony or generate 9.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Above Food Ingredients vs. Lancaster Colony
Performance |
| Timeline |
| Above Food Ingredients |
| Lancaster Colony |
Above Food and Lancaster Colony Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Above Food and Lancaster Colony
The main advantage of trading using opposite Above Food and Lancaster Colony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Above Food position performs unexpectedly, Lancaster Colony can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lancaster Colony will offset losses from the drop in Lancaster Colony's long position.| Above Food vs. Summit Hotel Properties | Above Food vs. Artisan Partners Asset | Above Food vs. Globalfoundries | Above Food vs. IPG Photonics |
| Lancaster Colony vs. Treehouse Foods | Lancaster Colony vs. John B Sanfilippo | Lancaster Colony vs. Seneca Foods Corp | Lancaster Colony vs. Seneca Foods Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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